Many persons might have attained to wisdom had they not assumed that they already possessed it.      ~ Seneca

Firing an employee publicly, on a whim, or without warning, may be entertaining to the "reality" television viewer, but in the real world of business, it’s not that easy.  Nor should it be.  Employers are obligated, both legally and ethically, to take the employer-employee relationship seriously by making thorough evaluations and thoughtful decisions before uttering, "You’re fired."

Exposure

Any time an employer fires an employee, he exposes his firm to serious financial risk.  Legislation designed to prevent discrimination such as the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Older Worker Benefit Protection Act affect firing decisions.  At the minimum, fired employees can seek unemployment compensation.  If the termination lacks proper documentation, regardless of the circumstances, the state unemployment office may award benefits to the person who was fired.  Over time, a company whose terminated employees successfully claim unemployment will pay higher unemployment insurance premiums, based on their experience rating.  Higher premiums increase overhead expenses and reduce profitability.

In 2004, according to the Maryland Chamber of Commerce, Maryland employers will be faced with up to a 367% increase in their unemployment insurance premiums.  For example, even the lowest rated employers will see their per employee tax go from $25 to $119 due to an ever growing amount of benefits being paid out.  By reducing indiscriminate firing, employers can protect their experience rating and reduce their individual premiums.

In the worst case, firing without cause or documentation can be viewed as discrimination based on gender, race, religion, ethnicity, or age.  The fired employee can then seek compensation by filing a lawsuit against the firm.  The financial exposure to the firm can be severe and dramatic based on the merits of the case.  Employers can be forced to pay damages to the fired employee in addition to the legal fees incurred in defending itself.  Indiscriminate firing also creates additional problems within the workforce.  Morale and productivity suffer when the threat of being unfairly fired is visible.  Lower morale increases turnover as employees begin to consider resigning.  Decreased productivity reduces profitability.  Eventually it becomes more difficult to recruit new workers when former employees tarnish the firm’s reputation.  Fortunately there is a three-step solution to the difficult issue of terminating employees.  Employers, by creating written policies, enforcing them fairly, and documenting any deviations consistently, can provide a structured environment and reduce exposure to risk.

Policy

Company policies regarding the basic expectations for all employees in the firm must be established, put in writing, and made available to everyone.  Depending on the size of the workforce and the nature of the firm, issues such as attendance, personal appearance, professionalism, scheduling, job performance, and quality standards should be spelled out in detail.  Ideally, everyone upon joining the firm would receive a formal orientation, which should include a review of general rules and regulations.  Policy updates should be posted regularly and the policy manual should be available to everyone.

Enforcement

The employer is then obligated to monitor the performance of each employee and document any deviation from company policies.  The key to fairness is the uniform enforcement of regulations in the workplace.  Just putting rules in writing is not enough to satisfy a judge.  If, for example, the policy on tardiness is not consistently applied to everyone--every day--it has no real meaning in the workplace, in the unemployment hearing, or in the courtroom.  Too often employers use their written policies in a selective or discriminating way to settle personal grudges in an opportunistic manner.  As a supervisor, you cannot ignore the behavior of a high performer who is habitually fifteen minutes late and then fire the under-achiever for being five minutes late.  Using tardiness disingenuously to solve the performance problem is not only unethical it’s cowardly.  The result of not uniformly enforcing company rules is exposure to legal action and the loss of credibility as a leader.

Documentation

Finally, it is imperative to document all aspects of an employee’s performance.  Regular performance reviews, as well as warnings, must be in writing and signed by the employer and the employee.  This practice provides two benefits.  First there is a clear record of performacne that an employer can use, if challenged, to demonstrate consistent policy enforcement across the spectrum of the workforce.  More importantly, if warnings are put into writing and presented fairly, the employer can correct performance issues before it becomes necessary to terminate the employee.

Being fired or having to fire someone is a traumatic experience.  Sometimes it is the right thing to do.  Destructive behavior, substance abuse, theft, or dishonesty must be documented, confronted and resolved quickly without regard to seniority or job status.  Inadequate performance, however, is more complex and requires time, effort, and a written plan of action.  By taking steps to create a structured work environment where professionalism and success are expected and rewarded, your opportunities to say, "You’re Fired," will decrease and be replaced by opportunities to say, "You’re Hired."

This article is provided as general information and is not intended to be a substitute for legal or other professional advice.